Minimum Wage vs. Living Wage

After reading a meme that basically said, “let’s stop pretending it’s possible to live on minimum wage”, I had a pretty strong negative reaction. While I agreed with the sentiment, I detested the graphic they used to illustrate the statement.

Three grocery carts were shown, depicting how far $20 went in 1998, 2005, and 2013. The 1998 showed a grocery cart filled to the brim with packaged foods. The implication being that in 1998, you could afford to feed your family on just $20.

I was raising two kids on a single income in 1998. In San Diego, California (not known for its affordable cost of living). And my then husband’s wages put us at barely above qualifying for Welfare (by barely, I mean $20 a month above the cut off). I became an expert at making our food dollars stretch. But there was no way I could have filled a grocery cart on just $20, not even on my best couponing day.

Since I like facts, and I do understand the point folks are trying to make about minimum wage, I did what I always do… I researched.

On the USDA and Bureau of Labor Statistics sites, I found some incredibly helpful info. I used 1993 rather than 1998, because they don’t produce these reports every year, and by the time they produced the next food cost report, they were using a Consumer Price Index rather than straight dollars. And my willingness to do math only stretches so far.

This reflects average US grocery costs in 1993 vs. 2015. These are average costs, not adjusted dollars, not showing discounts, coupons, or anything other than an average across all regions of the US. Obviously some areas would show higher prices, and some lower.

Some Data

In 1993, the US minimum wage was $4.25/hour.
In 2015, the US minimum wage is $8/hour.
In 1993, the US median cost to rent an unfurnished apartment was $600.
In 2015, the US median cost to rent an unfurnished apartment is $1,130.

Income

In 1993, working 20 hours each week at minimum wage, your gross weekly earnings would be $85. At full time, it would be $170. Or about $736 a month, before taxes.
Even if you are sharing that unfurnished apartment 50/50, your rent is $300. That’s around 40% of your pre-tax income.

In 2015, working 20 hours each week at minimum wage, your gross weekly earnings would be $160. At full time, it would be $320. Or about $1,386 a month, before taxes.
Sharing that unfurnished apartment 50/50, your rent is $565. That’s a little over 38% of your pre-tax income.

Bottom Line

The actual costs of housing and food, in percentage of income, are about the same. Yes, inflation has happened. Cost of living has increased. So has the minimum wage.
That does not mean that the current minimum wage reflects an actual living wage.

It does not.

But let’s not pretend that it reflected a living wage 20-plus years ago.

It did not.

Prior to getting married in fall 1993, I was making slightly over twice the minimum wage. I had a studio apartment of my own, a used car that was paid off, plus all the usual bills of insurance, utilities, food, etc.

While I was not hurting for money, I did have to budget carefully.

I could not have managed on minimum wage.

Frankly, the only people who can are teenagers still living at home.

If you want to call attention to the wage problem, do it with real numbers, not with the fantasy that 20-plus years ago, you could have gotten by on minimum wage.

Trust me, you could not have. I was there.

Now, if you want to talk the difference in the cost of education, and how today’s market has changed, making it nearly impossible for young adults to afford a college education, that’s a different subject entirely! The cost of attaining a decent education has risen astronomically, and the ability to get a job that enables you to pay off the exorbitant debt load has not.